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1 SLOT MACHINES Contents A. Introduction B. Background C. Current Slot Machine Policies D. Current Situation Assessment E. Landscape of Other Provinces F. Summary of Findings Public Views and Stakeholder Consultations G. Primary Issues and Recommendations Slot Machines (Report Date: 21 July 2001) 12-1

2 A. Introduction Slot machines are located in the province s 16 permanent licensed charitable casino facilities and are provided to temporary events authorized by the Commission, such as major exhibitions. Slot machines are also located in two racing entertainment centres affiliated with the racetracks at Edmonton Northlands and Lethbridge Whoop-Up Downs, as part of the Racing Industry Renewal Initiative to revitalize live horse racing in the province. This section discusses the background to slot machine gaming in the province. It provides key information related to current slot machine policies and an assessment of the current situation regarding slot machine gaming. Also provided are highlights of some key views and perspectives of adult Albertans regarding slot machines, as obtained through public opinion research. The perspectives of stakeholders, obtained through consultations with them during the Gaming Licensing Policy Review, are also provided. A cursory overview of some pertinent findings from other provincial jurisdictions is included. This section concludes with recommendations to address primary issues identified by the public, stakeholders and the Commission Slot Machines

3 B. Background Conduct and Management of Slot Machines Under the Criminal Code (Canada), only a provincial government may conduct and manage a lottery scheme operated on or through a computer, video device or slot machine. The Gaming and Liquor Act (Alberta) authorizes the Alberta Gaming and Liquor Commission to conduct and manage such lottery schemes on behalf of the provincial government. The province s network of slot machines is monitored through the Commission s central computerized system as a security/control measure, a critical element in the conduct and management of slot machines by the Commission. Each slot machine operates independently of other slot machines. The prize percentage pay out of each free-standing terminal is certified by an independent testing laboratory. Prize pay out is calculated as total winnings divided by total wagers and for slot machines in Alberta averages between 92% and 93% over extensive play. Slot Machines Venues Slot machines are found in the 16 permanent casino facilities located throughout the province, in temporary casinos during major summer fairs and exhibitions and in the province s two racing entertainment centres affiliated with the racetracks at Edmonton Northlands and Lethbridge Whoop-Up Downs. The Commission enters into an agreement with operators of licensed casino facilities to provide space and customer services in operating the slot machines during licensed casino events. The net revenue (after prizes) from slot machines in casinos is divided as follows: Alberta Lottery Fund - 70%, charities conducting licensed casino events - 15% and casino facility licensees or operators - 15%. The racing entertainment centres are part of the Racing Industry Renewal Initiative, to help revitalize live horse racing in the province. The initiative involves racetrack operators and the Alberta Racing Corporation. The net revenue from slot machines in racing entertainment centres is divided as follows: 15% commission to the racing entertainment centre operator and 85% to the Alberta Lottery Fund. Of the lottery fund portion, 18 1/3% is allocated to the racing entertainment centre operators to assist with the capital and operating costs of live horse racing and 33 1/3% to the Alberta Racing Corporation (ARC) through the government's annual budget process to enhance the purses of live horse racing at the racetracks. This allocation is also in place for slot revenues from the Stampede Casino in Calgary, with the exception that 15% is allocated to the charities working at the casino and 18 1/3% to the ARC for purse enhancements. Slot Machines (Report Date: 21 July 2001) 12-3

4 Types of Slot Machine Games, Themes and Denominations There are several different types of slot machines in the province. Each type of slot machine may be configured to any of numerous game themes. Examples of game themes include Red, White and Blue, Sizzling Sevens, Double Bucks, Monopoly, etc. Currently there are about 200 different game themes for slot machines in the province. There are video and mechanical reel games, single line and multi-line games, and progressive jackpots. Slot machines pay prizes in the form of coins dispensed in the tray of the machine or, in the case of larger prizes such as jackpot prizes, by cash or cheque. Slot wagers may be in denominations of five cents, 25 cents or $1. Wagers range from five cents to $5, depending on the games played and the number of coins or lines bet. For example, the maximum bet on five cent slots is $2.25 (45 lines times five cents). The maximum top prizes also depend on the game played. Some province-wide linked progressive games (in which various slot machines are linked together for the game and a portion of the cash played goes toward a prize that builds until it is won) have produced top prizes approaching $725,000. Some prizes from progressive slot games have included merchandise prizes such as new vehicles. Other progressive slot games include local area progressives, played in a single casino and standalone progressives, which involve play on a single slot machine in a casino. History of Slot Machines in Alberta The Criminal Code was amended in 1986 to grant authority to the provinces to operate mechanical or electronic gaming devices. The first electronic gaming devices to be introduced to the province were video lottery terminals (VLTs) in Slot machines were tested at the Calgary Stampede and during the Edmonton Klondike Days and rural fairs in In 1995, the Lotteries Review Committee, comprised of MLAs whose task was to consult with Albertans about the future directions for lotteries and gaming, recommended casino VLT revenues should be shared with non-profit organizations holding casino events. At that time there were no slot machines in the province s casinos. In January 1996, 225 slots were introduced to permanent casino facilities in Alberta, with a maximum limit of 25 slot machines for facilities in Edmonton and Calgary and 10 for facilities in other locations. Of the net revenue from slot machines (gross revenue less prizes), 10% was allocated to charities conducting licensed casino events, consistent with the Lotteries Review Committee recommendation of Casino operators received 5% of net revenue as commissions and 85% was placed in the Alberta Lottery Fund. The slot machines provided a standard three-reel game, 25 cent denomination and with a top prize of $1000. In November 1996, the commissions from slot machines was adjusted as follows: charities conducting casino events 15% of net revenue, casino operator 15% of net revenue and the Alberta Lottery Fund receives the remaining 70% Slot Machines

5 In July 1995, the Alberta Gaming and Liquor Commission amalgamated all liquor and gaming regulatory, enforcement and marketing agencies, including the Alberta Gaming Commission, the Alberta Gaming Control Branch, Alberta Lotteries and the Alberta Liquor Control Board. In July 1996, the Alberta Gaming and Liquor Commission would be formally established in the Gaming and Liquor Act. Racing Entertainment Centres Established In October 1996, the Commission, in partnership with the Alberta Racing Corporation and Edmonton Northlands, introduced 50 slot machines to Northlands Park as part of an initiative to revitalize the horse racing industry. 1 Net revenues were divided equally (33 1/3%) among the three partners: the racetrack operator, Alberta Racing Corporation and the Alberta Lottery Fund (through the Commission). Additional Slot Machines for Casinos In 1997, the casino operating guidelines allowed the maximum number of slot machines in casino facilities to be doubled based on various criteria including customer demand, terminal sales, performance and the space capacity of the facility; the hours for table games to be extended by one hour; liquor service on the casino gaming floor and for casinos to operate on Sundays. In June 1997, slots were installed in a racetrack facility located in Lethbridge. The centre operated with 25 slot machines. Casinos Improve Gaming Environment Since 1997, casino facility operators have expanded and improved their facilities to accommodate additional slot machines and attract slot players. Those that made renovations, including investment in decor and the general gaming environment, experienced an increase in overall sales, including revenue from table games. Some of the current casinos, constructed prior to the introduction of slot machines, were purpose or custom built exclusively for table games. As a result, the space capacity within these facilities has not kept up to the growing demand by players for slot gaming. Due to fluctuations in the daily casino hold (revenue less winnings) charities proceeds from slot machines began to be pooled, starting in July Pooling resulted in an averaging of proceeds among charities holding casino events. In the centres with more than one casino facility (Calgary, Edmonton and Red Deer) charities slot machine proceeds were shared equally through a citywide pool over a 90-day period. In other areas proceeds were pooled for 90 days by each casino. 1 Since then, another 200 slot machines were added to the facility. Slot Machines (Report Date: 21 July 2001) 12-5

6 Division of Slot Revenue in Racing Entertainment Centres The Auditor General of the province reported in May 2000 the division of slot revenue in racing entertainment centres was not in compliance with provincial legislation. The legislation requires that all lottery revenue, after payment of certain costs including retailers commissions, be deposited into the Alberta Lottery Fund. The Auditor General also indicated any additional revenue to support the racing renewal initiative would have to be voted on by the provincial legislature. As a result, the division of slot machine net revenue (gross revenue less prizes) was adjusted as follows: 15% commission to the racing entertainment centre operator and 85% to the Alberta Lottery Fund. Of the lottery fund portion, 18 1/3% is allocated to the racing entertainment centre operators to assist with the capital and operating costs of live horse racing and 33 1/3% to the Alberta Racing Corporation (ARC) through the government's annual budget process to enhance the purses of live horse racing at the racetracks. This allocation is also in place for slot revenues from the Stampede Casino in Calgary, with the exception that 15% is allocated to the charities working at the casino and 18 1/3% to the ARC for purse enhancements. Gaming Licensing Policy Review Announced The Minister of Gaming announced a review of gaming licensing policies in December The Commission suspended consideration of requests to license or approve new casinos, casino expansions or re-locations, new games and new gaming environments pending the outcome of the review. Casino Proceeds Exceed Those of Bingo Since 1982 and, until recently, the total amount of proceeds to charities from bingo events has exceeded that from casino events. That changed in , when the total amount of proceeds to charities from casino gaming (from table games and slots combined) exceeded bingo. Table 12-1: Numbers of Slot Machines in Alberta, FISCAL YEAR UP TO DATE SHOWN NUMBER OF SLOT MACHINES NUMBER OF SLOT LOCATIONS COMMENT March 31, Slot machines introduced to majority of permanent charitable casino facilities in March 30, During slot machines were introduced to remaining permanent casino facilities, added to existing ones, and introduced to the Northlands racing entertainment centre. March 29, , Slot machines introduced to Whoop-Up Downs racing entertainment centre in Lethbridge in March 31, , Additional slot machines added to existing facilities. Slot machines were removed from Cash Casino in Lethbridge during March 18, , Cash Casino in Lethbridge closed in the summer of Slot machines added to existing or relocated casino facilities. March 31, , Slot machines added to existing or relocated casino facilities Slot Machines

7 C. Current Slot Machine Policies The province s slot machine policies have been developed within a legal framework that consists of the federal Criminal Code, the province s Gaming and Liquor Act and Gaming and Liquor Regulation. Under the Criminal Code only a provincial government may conduct and manage a lottery scheme operated on or through a computer, video device or slot machine. The Gaming and Liquor Act (Alberta) authorizes the Alberta Gaming and Liquor Commission to conduct and manage such lottery schemes on behalf of the provincial government. A more detailed discussion of the legal requirements are provided in the appendix Legislative Requirements and Considerations. The Alberta Lottery Fund is the primary beneficiary of slot machine gaming. The Alberta Lottery Fund supports thousands of charitable, non-profit, community and public initiatives across the province. Charities that hold casino events in the permanent charitable casino facilities also receive a commission of 15% of the net revenue from slot machines for their charitable community projects. Province s Slot Machine Network In keeping with its responsibilities to conduct and manage electronic gaming devices, the Commission purchases and owns slot machines and monitors the network of all its slot machines through a central computerized system as a security/control measure. The Commission enters into a Casino Gaming Retailer Agreement with each operator of a charitable casino facility and a racing renewal initiative agreement with the operator of each racing entertainment centre. Under these agreements the operator agrees to provide space for slot machines and customer services during their operation; in return the operator receives a commission of 15% of net sales from the slot machines. Commission staff install, remove and provide technical maintenance for all slot machines and the related signage and equipment. Casino Facility Policies - Permanent Facilities Casino facility licensees or operators are required to meet the slot machine policies contained in Casino Terms & Conditions and Operating Guidelines as well as the conditions in the casino gaming retailer agreement with the Commission. Under current policy the Commission will provide a minimum of 50 slot machines to minor casinos (those with 15 or fewer table games) and 100 to major casinos (those with 16 or more table games). The casino facility licensee must provide electrical outlets, slot machine cash cage, the appropriate insurance as required under the retailer agreement and agree to report any slot machine malfunctions to the Commission. The licensee is also required to cover related utility Slot Machines (Report Date: 21 July 2001) 12-7

8 costs and any costs for the repair of slots, fixtures, or signs destroyed or damaged, other than by normal wear and tear, while in the care of the licensee. All proceeds received from slots, less winnings and retailer commissions, are the property of the Commission. The retailer receives, holds and deals with those proceeds as bare trustee for the Commission. Charitable organizations that conduct casino events receive 15% of slot machine net revenue as commissions. In cities with one casino the revenues are pooled and distributed at the end of the pooling period to each charity that held a casino at that facility during the pooling period. In Edmonton, Calgary and Red Deer, cities with more than one casino, the net revenue from slot machines is pooled from all the charitable casinos in the city that were held during the pooling period and distributed accordingly to the charities. Casino Policies - Temporary Events The Board of the Commission may each year approve requests for slot machines from eligible summer agricultural fairs and exhibitions (see below for the list of approved events in the province). If those slot machines are provided during a casino event held by the agricultural fair or exhibition, then the terms and conditions for slot machines are similar to those of permanent casino facilities, as provided in the Casino Terms & Conditions and Operating Guidelines and include a casino gaming retailer agreement. A non-profit organization that operates an annual summer fair or exhibition in a community where a casino facility licence already exists, may apply for a casino licence in the community s casino facility for the duration of the major event. For example, the non-profit organizations involved with the major events in Red Deer, Medicine Hat and Lethbridge participate in this type of arrangement. Red Deer and Medicine Hat also have slots on site at their respective fairs and exhibitions. Edmonton and Calgary are excluded from using the existing permanent casino facilities so that casino event licences may be be issued to other qualified charitable groups during the major event. Both of the larger centres operate their own on-site casinos during their major exhibitions. Based on availability, slot machines may be allocated to the approved annual major events as follows: a) Edmonton (Klondike Days)- maximum 250 slot machines and, if available, up to 100 test slot machines; b) Calgary (Calgary Stampede) - maximum 250 slot machines, and if available up to 100 test slot machines; c) Red Deer (Westerner Days) - maximum 75 slot machines; d) Lethbridge (Whoop Up Days) - maximum 75 slot machines; e) Medicine Hat (Medicine Hat Stampede) - maximum 50 slot machines; f) Grande Prairie (Grande Prairie Regional Exhibition) - maximum 50 slot machines; g) Camrose (Camrose Jamboree) - maximum 100 slot machines; and h) Tsuu T ina (PowWow Days) - maximum 100 slot machines. A test slot machine is one that is authorized for use to determine customer acceptance and performance. Depending on the results, such slot machines may be introduced as part of the slot machine program in the province Slot Machines

9 Racing Entertainment Centre Policies The slot machine policies that affect Racing Entertainment Centres (RECs) are contained in the Racing Industry Renewal Initiative Agreement between the Commission and the REC operator, who must be a racetrack operator licensed by the Alberta Racing Corporation. Under the agreement the operator is required to provide space for the slot machines, a variety of services and the appropriate utilities for the operation of slot machines (for example, power). The services to be provided include those related to security, handling of slot revenue and providing a cash float and keeping proper records as required. The operator is also required to report any slot machine malfunctions to the Commission. For the space and services provided, the operator receives a commission of 15% of slot machine net revenue (gross revenue less prizes). Hours of Operation Casinos may operate within the maximum hours of 10 a.m. to 3 a.m. Casinos may operate slot machines for up to a maximum of 17 consecutive hours per day between those maximum hours, seven days per week. Casino facilities other than those in Edmonton and Calgary typically operate from 12 to 17 hours, seven days per week. Racing entertainment centres may operate a maximum of 17 consecutive hours per day, between the hours of 10 a.m. to 3 a.m., up to seven days per week. Slot Machines (Report Date: 21 July 2001) 12-9

10 D. Current Situation Assessment General As of March 31, 2001, there were 4,353 slot machines in the province. Table 12-2: Slot Machines Per Venue (as of March 31, 2001) VENUE LOCATION NO. OF SLOT MACHINES Palace Casino Edmonton 271 Bacarrat Casino Edmonton 284 Casino Edmonton Edmonton 429 ABS Yellowhead Casino Edmonton 600 CITY TOTAL Edmonton 1,584 ABS Casino Calgary Calgary 400 Stampede Casino Calgary 158 Elbow River Inn Casino Calgary 200 Silver Dollar Casino Calgary 256 Cash Casino Calgary 344 CITY TOTAL Calgary 1,358 Cash Casino Red Deer 142 Jackpot Casino Red Deer 142 CITY TOTAL Red Deer 284 Boomtown Casino Fort McMurray 50 Great Northern Casino Grande Prairie 181 Vanshaw Casino Medicine Hat 200 Gold Dust Casino St. Albert 204 ABS Casino Lethbridge 180 SUBTOTAL All Casino Facilities in Alberta 4,041 Edmonton Northlands (Racing Edmonton 250 Entertainment Centre) Lethbridge Whoop-Up Downs Lethbridge 62 (Racing Entertainment Centre) SUBTOTAL Racing Entertainment Centres 312 TOTAL ALL VENUES 4,353 The table above does not include the number of slot machines provided to the temporary summer fairs and exhibitions. The maximum number of slots that may be allocated to them is provided under Current Slot Machine Policies in this section. Product Mix Since the introduction of slot machines in January 1996, the slot product mix in the province has been expanded to include: nickel slots; multi-game video slots; slant top and mini-bertha cabinets; diverse themes; Slot Machines

11 Revenue nudge and re-spin games; bonus schemes; sound effects; top awards of up to $25,000; progressive awards (awards have been as high as $725,000); merchandise prizes; bill acceptors; and other features. In , slot machines generated revenues as follows: $252 million to the Alberta Lottery Fund, $53.7 million to charities that held casino events and $65.2 million in commissions to slot machine retailers, that is, licensed casino facilities and racing entertainment centres. Chart 12-1: Gaming Revenue from Slot Machines Totals ($000,000) ($000,000) ($000,000) ($000,000) ($000,000) ($000,000) ($000,000) Revenue Slots ,227 3,546 4,842 11,607 Cost of Goods Sold (COGS) Prizes ,051 3,275 4,467 10,683 Retailer Commissions & Taxes Total COGS ,116 3,371 4,590 10,998 Gross Profit Net to Alberta Lottery Fund Among gaming activities conducted and managed by government, slot machines have contributed the greatest increase in net revenues over the past few years. Graph 12-1: Breakdown of Slot Revenue ($000,000) 6,000 4,500 3,000 1, Prizes Gross Profit Retailer Commissions & Taxes For example, net revenue from slot machines (after prizes and expenses) increased to $252 million in from $111 million in , an increase of 127%. By comparison, VLT net Slot Machines (Report Date: 21 July 2001) 12-11

12 revenue increased by just more than 13% over the same period, to $574 million from $508 million. Graph 12-2: Slot Revenue and Terminal Count # of Slots Gross Profit ($000,000) Slots Gross Profit Revenue Projections Net revenue from slot machines in are expected to exceed budget forecasts by 9%. The Commission anticipates slot machines will generate net revenue of $395.2 million in , an increase of 19% over the budgeted slot net revenue of $331.6 million in As compared to the budgeted net revenues from slot machines, charitable casinos are projected to experience increases in net revenue from slot machines in as follows: Edmonton casino market 26.9%, Calgary casino market 21.7%, rural casino market 21.2%. The net revenue from the two racing entertainment centres is forecast to decline by 7.6% in over the budgeted sales figures for In fiscal year 2001, summer fairs and exhibitions earned $1.1 million in commissions from slot machines and the same amount from table games. Market Potential The Commission has not conducted a formal study into the market potential for slot machine gaming in the province. However, in the past few years total slot revenue has continued to grow at a pace consistent with the rate at which they are installed. In other words, each additional slot machine generated incremental or new sales. As casinos in the province expanded from 1997 to 1999, the average net sales per terminal for all slots in the province has remained relatively stable, yet during this same time the number of slots increased by 173%. The demand for slots has remained constant even as the supply has almost doubled Slot Machines

13 E. Landscape of other Provinces All the jurisdictions in Canada that operate slot machines do so in conjunction with their casino or racing programs. Slot Machine Revenues and Player Participation Continues to Increase According to Statistics Canada, the percentage of households in Canada that spent money on at least one gambling activity dropped to 77% in 1998 from 82% in This participation decreased in provincial lotteries (to 68% from 74%); non-government lotteries, raffles, and other games of chance (to 34% from 39%) and bingos (to 10% from 12%). Only participation in casino slot machines and VLT activity increased (to 20% from 17%). Despite the decreased participation rates, average expenditures for all types of gaming increased. Slot machines and VLTs led with increases in average expenditures for participating households, to $430 in 1998 from $360 in 1996, an increase of 19%. According to the survey, Alberta had the highest average expenditures in this activity at $685 for participating households, whereas Quebec had the lowest at $240 (Statistics Canada, Update on Gambling, Perspectives, Spring 2000 issue). Provincial Government Policy is Paramount Provincial governments are responsible for the conduct and management of all slot machine gaming activities in Canada. The Criminal Code states they are the exclusive domain of provincial governments. Each provincial jurisdiction has taken its own approach to slot machine availability. For example, in British Columbia the Union of British Columbia Municipalities (UBCM) and some local governments passed bylaws prohibiting the installation of slot machines within their boundaries. Since then, the policy dispute was resolved through a Memorandum of Understanding with the UBCM in which local governments were given the right to approve the introduction of slot machines, obtain a share of the proceeds (10%) from gaming within their boundaries and affirm their authority with respect to zoning and development permits. The B.C. Ministry of Labour s commissioned report Relocation of, and Changes to, Existing Gaming Facilities in British Columbia (Meekison, 2000) states: While it appears that the faultline between the province and municipalities has disappeared, it may be only temporary because the Lottery Corporation may cause municipalities to review their policies governing slot machines. If a particular municipality does not want slot machines within its boundaries, the Lottery Corporation, in fulfilling its mandate to maximize revenues for the provincial government, believes it has an obligation to pursue the relocation of casinos to municipalities that are more receptive to the idea. This carrot and stick position may lead to further strains between the province and individual municipalities. The following table, which gives an overview of the slot machine activities in the other provinces, closely resembles the landscape of casino gaming in the provinces (see the separate section Casino Gaming ). Slot Machines (Report Date: 21 July 2001) 12-13

14 Table 12-3: Landscape of Slot Machine Operations in Other Provinces at March 31, 2000 JURISDICTION NO. OF SLOTS / SITES DIVISION OF COMMENTS REVENUE British Columbia 18 Sites 2 destination casinos 25% slot win to operator 75% to BCLC Progressive slots are prohibited. Conducted & Managed by: British Columbia Lottery Corporation. 16 community casinos Regulated by: Gaming Policy Secretariat. 2,399 Slots 524 destination 1,875 community Stepper reel is the only type of slot authorized for use in BC. Up to an additional 3% of slot win can go to the operator for facility development based on an approved plan being in place. Installation of slots at horse racing facilities is prohibited; however a casino may relocate to a racetrack if requirements are met (including approval of host municipality) and if horse racing remains the primary function. Slot cap of 7,200 based on 300 slot maximum at 24 casinos (18 existing 6 pending destination casinos). Alberta Conducted & Managed by: Alberta Gaming and Liquor Commission. Regulated by: Same. 18 Sites 16 casinos 2 racing entertainment centres 4,353 slots 4,040 casino 312 racing entertainment centres Charitable casinos 15% charity 15% siteholder 70% Alberta Lottery Fund Racing Ent. Centres 15% REC operator 85% Alberta Lottery Fund January gov t announced First Nations gaming policy allowing for on-reserve casinos. No slot cap. Saskatchewan Conducted & Managed by: Saskatchewan Gaming Corporation (Casino Regina only) and Saskatchewan Indian Gaming Authority. Regulated by: Saskatchewan Liquor and Gaming Authority. 5 sites 1 commercial casino 4 First Nations commercial 1240 Slots 620 Casino Regina 620 First Nations Commercial 50% SK Gen. Revenue 25% First Nations Fund 25% Associated Entities Fund First Nations 37.5% SK Gov t 37.5% First Nations 25% Associated Entities Fund Minimum age: 19 Current government policy - no expansion of electronic gaming. Slots are at casinos only. Saskatchewan Gaming Corporation a crown corporation - owns its slots. First Nations slots are owned by SLGA and operated under contract by Saskatchewan Indian Gaming Authority (SIGA). No slot cap Slot Machines

15 JURISDICTION NO. OF SLOTS / SITES DIVISION OF REVENUE Manitoba 2 Sites 100% MLC 2 commercial casinos Conducted & Managed by: 1,231 Slots Manitoba Lottery Corporation. COMMENTS Located at casinos only. No slot cap. Regulated by: Manitoba Gaming Control Commission. Ontario Conducted & Managed by: Ontario Lottery and Gaming Corporation. Regulated by: Alcohol and Gaming Commission of Ontario. 20 Sites: 3 commercial casinos 5 charity casinos 12 racetracks Slots 8,078 commercial 900** charity 7,064 racetrack Number of slots at racetracks ranges from 325 at Sudbury to 1,700 at Woodbine. Commercial 100% OLGC* Net profits from Casino Rama are shared among 134 First Nations groups. Charity Casinos Charity receives 100% of net proceeds. Host local gov t receives 5% gross slot revenue. Slots 20% Racetrack 80% OLGC Host local gov t receives 5% gross slot revenue + 2% of every slot over 450. Minimum age: Revenue Commercial: $1.5 billion Racetrack: $362.5 million* *Only 9 racetracks operated for full year of Fiscal ** Only 2 charity casinos operated for full year of Fiscal June 2000 Ontario government announces 3- year freeze on expansion of new charity and commercial casinos, and charity racetracks. Quebec Conducted & Managed by: Loto-Quebec. Regulated by: RACJ. 3 Sites 3 commercial casinos 5,185 Slots 3000 Casino de Montreal 1410 Casino de Hull 775 Casino de Charlevoix. 100% Loto-Quebec Minimum age: 18 Located at casinos only. No slot cap. Nova Scotia Conducted & Managed by: Nova Scotia Gaming Corporation. Regulated & Licensed by: Nova Scotia Alcohol and Gaming Authority. 2 Sites 2 commercial casinos 1000 Slots 650 Halifax 350 Sydney 100% NS Gaming Corp. Minimum age: 19 Located at casinos only. No slot cap. New Brunswick No slots. N/A N/A Prince Edward Island No slots. N/A N/A Slot Machines (Report Date: 21 July 2001) 12-15

16 JURISDICTION NO. OF SLOTS / SITES DIVISION OF REVENUE Yukon No slots. N/A N/A COMMENTS Northwest Territories No slots. N/A N/A Nunavut No slots. N/A N/A Slot Machines

17 F. Summary of Findings Public Views and Stakeholder Consultations Stakeholder Consultations The Gaming Licensing Policy Review process included obtaining the views and perspectives of the Alberta public, including both players and non-players, and stakeholders. This summary of findings presents a snapshot of those views and perspectives focusing on slot gaming. The review process also included a review of gaming-related literature gathered from jurisdictions around the world. A few key sources are described here. The findings are divided as follows: Public - The views and attitudes of adult Albertans about gaming activities in the province. Stakeholders - The views and perspectives of stakeholders. Stakeholders are either directly involved in the gaming industry, or indirectly involved through the services they provide or through some related experience or interest. Most stakeholders have knowledge of at least some of the gaming licensing policies currently in effect. Others will be fully aware of those licensing policies, in particular as they may apply to the gaming activity with which they are directly involved. Landscape- The perspectives in a number of other jurisdictions. Public In May 2000, during the licensing policy review, the views and perspectives of adult Albertans were sought through public opinion research. The research shows Albertans tend to view slot machine gaming as a harder form of gambling. More than half of Albertans believe it is up to each individual to control his or her own gambling. More than half of the public also indicated they are not well informed about where proceeds from gaming go. The top four areas identified by respondents as deserving of gaming proceeds in general were charities (34.9%), health care (29.1%), education and schools (23.2%) and community organizations (20.9%). Other areas each received less than 15% support. More than half of respondents indicated their main source of information about where proceeds go is the newspaper. About 58% of adult Albertans supported the current level of availability of slot machines at local casinos, close to 38% indicated they would like them to be made less accessible at local casinos and 4% more available. Slot Machines (Report Date: 21 July 2001) 12-17

18 Respondents indicated clearly players should be able to play slots at resort casinos (93.9%) or local casino (92.4%). A majority also indicated they should be able to play them in a Native casino on reserve land (68.2%), in a gaming room in a hotel (65.2%), location devoted to video lottery terminals (VLTs) (62.9%) and bars and lounges (54.5%). Less than half indicated players should be able to play slot machines at a race track (46.2%) and at a bingo hall (38.2%). Thirteen percent of respondents played slot machines at local casinos. Among those players, the average amount spent over the last month (when the public opinion research was undertaken) was approximately $ for slot machines. In single play the average time spent by players on slot machines was one hour and they spent an average of approximately $ The preferred places to play slots for players, if slot machines were to be available in all the various venues, would be the local casino (84.4%), resort casino (70.9%), gaming room in a hotel (57.8%) and bars and lounges (54.6%). In addition, 42.2% said they would play slots at a First Nations casino on reserve land, 32.1% would play them at race tracks and 17.4% at bingo halls. Sixty-seven percent of slot players indicated slots have not affected their overall spending on gaming, while 24% indicated their spending has increased. More than 80% said slots have not affected their spending on other games, such as casino table games, bingo, horse race betting, instant tickets or lottery tickets and VLTs. Almost 70% of slot players prefer just slots, not table games; 22% enjoy both of those activities and 9% have no preference. Of casino players, about 83% said they would definitely or probably play regular slot machines when they visit a casino. Close to half indicated they definitely would play them and a little more than one-third indicated they would probably play. For respondents, the ideal features in gaming facilities of any kind are security and a clean, modern environment. Other features also rated highly were spacious surroundings, convenient parking, easily identifiable staff and non-smoking sections. Stakeholders Consultation with stakeholders occurred during the Gaming Licensing Policy Review. During September and October 2000, facilitated interviews and discussions occurred with stakeholder groups throughout Alberta. In addition, representative telephone surveys were conducted involving more than 600 representatives of charitable organizations. Three hundred industry workers involved with bingo and casino were also surveyed for their views. Integrity of gaming is a common interest. Stakeholders feel the Commission has been professional and acts with integrity. None called into question the Commission s own integrity, even though they may have been opposed to some policy decisions of the Commission. Stakeholders generally desire a level playing field, where everyone knows the rules, and there is fair opportunity to participate Slot Machines

19 There is a wide range of knowledge among stakeholders about where the proceeds from gaming go and how they are used. Many want to see more money spent informing people about how proceeds are used. Few suggestions were made to improve rules and regulations. Many stakeholders expressed an interest in providing more input during the development of policies. As to social responsibility, some stakeholders feel the Commission (and the media) overstates the problems associated with gambling, and should allow the marketplace to determine growth. Other stakeholders feel the Commission understates the problem and should further restrict gaming activities. Those who favour expansion of gaming activities indicated the Commission should be more proactive in communicating the benefits to the province from gaming. Other stakeholders feel not enough attention has been paid to the costs and more needs to be done to assess the net impact of gaming in the province, including additional funding to address the negative aspects. Industry Stakeholders Most charities believe access to gambling is well controlled and regulated and rules have been consistently enforced. A minority believe more types of gambling should be permitted in the province. Charities felt a better job could be done to communicate the benefits of gaming. Communicating with the gaming industry could also be improved upon. The views of gaming workers in casino and bingo, for the most part, reflected similar views to those of charitable groups as discussed above. About 60% of both gaming workers and charities believe the availability of slot machines should remain the same, consistent with the view of most Albertans. About one-quarter of charities believed they should be less available and 21% of workers held this view. About 17% of workers and 12% of charities felt slot machines should be made more available. A gaming industry representative felt aging gaming equipment has to be replaced more quickly. As well, levels of technical support service should be improved, a view expressed by other stakeholders involved in slot machine gaming. It was felt input should be sought by the Commission prior to finalizing the gaming licensing policy review. Casino facility operators are of the opinion current casino facilities are already capturing 80% of the market potential in their trade areas. They have indicated more opportunity exists for casino growth in Calgary than in Edmonton. Bingo and horse racing stakeholders felt there was unfair competition from casinos, from video lottery terminals (VLTs) and slot machines approved by the Commission. Bingo stakeholders desire a plan for gaming development rather than what they perceive as an ad hoc approach to bingo. They feel they compete for the same player and nickel slot machine players are also bingo players. To compete they feel there is a need to introduce electronic bingo, keno and slot machines in bingo halls. It was felt by some bingo stakeholders since licensed bingo facilities are entertainment facilities, they should be permitted to offer a variety of games to customers and with fewer restrictions. Slot Machines (Report Date: 21 July 2001) 12-19

20 At the same time, both bingo and horse racing representatives want to see a better differentiation of gaming products being offered, to distinguish among them. For example, it was felt racing entertainment centres should have exclusivity to the electronic horse race games, which also are found in casinos. Major exhibitions indicated they pioneered gaming in the province through horse racing and their other early involvement in ticket lotteries and casino gaming. A priority was to obtain more funding from the Alberta Lottery Fund. A representative of one major exhibition indicated more slot machines are needed to help revitalize the horse racing industry. A better mix of games and analysis is also needed. A representative of another major exhibition echoed that view, indicating more attention needs to be paid to the growth in demand at racing entertainment centres and ways to benefit or stimulate live horse racing. Municipalities and Police Services A representative of a municipal association felt there needs to be more equitable access to gaming funds by smaller communities in the province, for example, by rural charities having more access to the proceeds (slot and table games) at larger urban casinos. A municipal representative believes as gaming grows, more attention is needed to ensure its integrity and security. The representative felt gaming should be available through dedicated gaming venues such as casinos. Police services felt the Commission has done a good job in regulating gaming in the province. Nevertheless, they did have some issues. It was felt a balancing of social responsibility and growth of gaming is required. One police service representative felt a full cost benefit analysis would be appropriate. The representative was not aware that the Alberta Gaming and Research Institute was formed for that purpose. A police service representative expressed the view larger crowds visiting casinos could result in problems such as inevitable fighting and increased work for police. Another representative wondered whether police should be directly involved with policing in casinos. Preventing crime and addressing criminal activities through joint forces with the Commission was suggested as a possibility. This was a common suggestion of most police services and also suggested by an official with the provincial Justice department. Service Agencies and Advocacy Foundation One public advocacy foundation believes an organization such as the Commission is bound to be biased in its decisions when it generates so much revenue from gaming. Even so, the foundation believes the Commission is doing a good job balancing the public and special interests. It also believes the Commission is doing better than other jurisdictions in the area of consultation. On a more general note, the foundation felt the Commission should produce more information on the state of gaming in the province. It was felt a detailed information report, for example, would help in discussions related to First Nations casinos and how government wants to equitably and responsibly develop those casinos Slot Machines

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